Can HR Negotiate Better Software Deals?

The HR Capitalist has an amusing and insightful blog post up about why so many Human Resources professionals tend to be poor negotiators. Many people get into HR because they enjoy helping people – not because they enjoy driving a hard bargain. This generous attitude has its place in creating great employee relations, but it doesn’t serve HR well at the bargaining table when money is on the line. HR decision makers need to be ready and willing to negotiate with their software vendors to get the best product and the best deal.
Pricing Isn’t Always Set In Stone

For core HR software that can be purchased from many different vendors, pricing is usually a negotiable point. This is more likely to be the case with on-site licensed products than with SaaS. Vendors that use traditional licensing as their primary business model often have significant wiggle room if their pricing is inflated. Figuring out where the padding is can help HR determine where to ask for price breaks. Pricey ongoing maintenance/service packages allow many of these software vendors to generate a substantial portion of their revenue. This is an area where HR may be able to vigorously negotiate for better pricing.

In the SaaS market, the profit margins are not always as flexible. The vendor is already taking primary responsibility for all the software maintenance, upgrades, security, etc. Plus, these vendors are often pricing their products very aggressively to earn a larger market share in an industry still dominated by traditional licensing. However, with SaaS vendors who require a contract rather than a no-commitment monthly subscription, there is sometimes a potential to negotiate a longer contract term in exchange for a lower fee. It never hurts to ask.

It’s Not All about the Money

Niche and Best of Breed HR software vendors may be less likely to come down on their pricing because they are not in competition with as many other products. However, this doesn’t mean there is nothing on the table to negotiate. For example, your organization might need to interface the vendor’s software product with another application such as your HRIS, ERP, or a third party program.

A savvy SaaS vendor might have a vested interest in helping develop such an interface. Building a track record of successful interoperability with a broad category of applications gives the vendor a competitive advantage and widens their prospective client base. At Emerald Software Group, we are constantly adding to our portfolio of interfacing capabilities for Universal Onboarding. So, let us know your needs in this area – we are ready and willing to negotiate!